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5: A Bubble by Any Other Name

‘When peak prices hit, we believe they are also likely to fall precipitously. That’s the way cyclical turning points tend to occur – in the midst of a market trend, turning points can be sudden, unexpected, and severe.’

Edward Morse et al, Lehman Brothers, “Oil dotcom”, 29/05/08

5.1 The Bust

One year on from writing the words above, Ed Morse confesses that he did enjoy some schadenfreude when what he had warned of for so long came to pass. But who wouldn’t – because when the bust in the oil price anticipated by Morse, Colin Smith of Dresdner Kleinwort, and a few other market commentators (myself included), did come, it was truly spectacular. From oil’s highest ever closing price of $145.18 on July 14 2008, ...

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